Paytm share price surged over 5% after the fintech giant announced the sale of its entertainment and ticketing business to food delivery app Zomato for ₹2,048 crore. Paytm shares rose 5.47% to ₹604.45 on BSE, while Zomato shares also rose 2.71% to ₹267.00.
Fintech giant Paytm’s parent company, One97 Communications, entered into a definitive agreement for the sale of its entertainment ticketing business, which includes movies, sports and event ticketing, to Zomato for ₹2,048 crore.
Paytm’s movie and event tickets will remain available on its app during the transition period for the next 12 months. After that, users will be redirected to Zomato’s upcoming app for the ‘going-out’ segment.
Analysts believe the acquisition gives shape and scale to Zomato’s ‘outbound’ business, acting as an additional growth engine in the medium to long term. For Paytm, the deal will boost its cash and cash equivalents, which can be used to enhance its cash-back program to revive its payments business.
“Post the acquisition, Zomato’s management estimates GOV to be valued at more than ₹10,000 crore in FY26. Management expects the exit business to operate close to break-even on an adjusted EBITDA basis, while potentially delivering 4-5% of adjusted EBITDAM as a % of GOV in the medium to long term. Deepeshkumar Mehta, senior research analyst at Emkay Global Financial Services, said the management’s strong execution track record gives confidence that the exit will add further value in the long term.
The brokerage firm has given ‘buy’ rating on Zomato shares with a target price of ₹270 per share.
Meanwhile, Paytm’s strategy is to focus on its core payments or financial services business. The deal values Paytm’s movies and event ticketing business at 6.9x FY24 revenue, compared to the earlier deal proposed by KKR for BookMyShow (7.7x FY23 revenue).
“In our view, this deal will strengthen Paytm’s cash and cash equivalents, which will likely be used to enhance its rewards/cash-back program to revive its declining payments business following the RBI action. “The net one-time profit adjusted for earnings expenses will narrow the net loss in FY2025, but hurt future earnings,” said Anand Dama, senior research analyst at Emkay Global Financial Services.
He said, based on a rough proforma estimate, the net value accretion or change in Paytm target price due to the deal could be only ₹25 per share, which is much lower than the stock price reaction already seen following the news flow about the deal.
Emkay Global has ‘reduce’ rating on Paytm shares, with a DCF-based target price of ₹375 per share.
At 9:25 am, Paytm shares were trading 2.58% higher at ₹587.90 on the BSE, while Zomato shares were up 1.06% at ₹262.70.
